Government to take provident fund interest decision after state elections results

NEW DELHI: Worried over political implications of a cut in provident fund interest rates amid ongoing state elections, the government has decided to defer its decision on the rate till the state elections are over.

The minimum pension for both organised and unorganised sector workers may be put off till March end.

The Central Board of Trustees, the top policy making body of the Employees Provident Fund Organisation (EPFO), will meet on Wednesday to discuss the guaranteed minimum pension and passbooks for EPFO subscribers.

The labour ministry also hopes to get feedback from the finance ministry on the interest rate on EPF for the year.

"Since it will be the first CBT meeting after the one in December when it was left to the finance ministry to decide on an appropriate interest rate, all stakeholders would be eager for some feed back," a government official said.

The CBT is chaired by the labour minister and comprises top officials from the finance and labour ministries and representatives from both workers and employers organisations.

The EPFO has recommended 8.25% interest on deposits for the current year, against a 9.5% interest announced last year.

Trade unions are batting for 9.5% interest this year as well, while employers have suggested an interest rate of 8.5%.

There is, however, not too much expectation of anything concrete emerging in the meeting.

"The government will not want to make any comments on EPF interest rate or funding of minimum pension before elections are over. My guess is that another meeting of the CBT will be called in March-end for taking such decisions," BN Rai from Bhartiya Mazdoor Sangh told ET.

Ongoing polls was one of the main reasons why EPF interest rate was not included in the agenda for the CBT meeting today, an official said.

"While we may get some indications on what the finance ministry is planning to do, we do not expect anything definite," the official added.

While the feasibility of giving a guaranteed minimum pension of 1,000 per month for all workers covered under the employees provident fund organisation is on the formal agenda, there is scepticism about a decision on the issue as well.

"As both workers and employers are expecting the government to make the required contribution for this and the finance ministry may not be willing to take on the burden, this issue may also be postponed," Rai said.